COSME : financial instruments.
Date: 2015-02-12
Institutions: European Investment Fund
Subjects: EU financing, EU programme, Framework Programme for Research and Development, competitiveness, corporate finance, financial instrument, industrial development, small and medium-sized enterprises

COSME
financial instruments

What is COSME?

COSME is an EU programme for the Competitiveness of 
Small and Medium-sized Enterprises (SMEs). A significant 
part  of  the  COSME  programme  is  dedicated  towards 
financial instruments managed by the European Investment 
Fund (EIF) under a European Commission mandate.

The COSME financial instruments aim at improving access 
to finance for SMEs and encouraging the competitiveness 
of European enterprises. The COSME financial instruments 
run  from  2014  to  2020  with  a  planned  budget  of  EUR 
1.3bn. EIF aims to enhance access to finance for SMEs 
through  selected  financial  intermediaries  –  including 
local financial institutions or private equity funds selected 
by  EIF  through  a  call  for  expression  of  interest.  Financial 
Instruments are funded by the European Union, under the 
COSME programme.

What kind of financial instruments 
does EIF offer to financial 
intermediaries under COSME?

Under  COSME,  EIF  offers 
instruments to financial intermediaries:

two  different 

financial 

 ■

 ■

 The Equity Facility for Growth (“EFG”) 

 The Loan Guarantee Facility (“LGF”)

Which companies does COSME 
support?

COSME  was  created  to  support  SMEs,  which  play  a 
crucial  role  in  the  creation  of  growth  and  employment 
but which also face difficulties in accessing finance. 

Via its selected financial intermediaries, EIF provides risk 
capital  financing  to  SMEs  allowing  them  to  reach  their 
next development stage. 

While there is no specific sector focus, potential target 
companies must not be active in any of the EIF restricted 
sectors.  

Which countries does COSME 
target?

COSME,  via  selected  financial  intermediaries,  targets 
SMEs which are established and operating in European 
Union  Members  States,  as  well  as  in  Iceland  and 
Montenegro. 

Other  countries  may  be  included  in  the  scope  of 
COSME  and  updated  information  can  be  found  on  the 
European Commission’s website.

Loan Guarantee Facility

How does the COSME LGF work?

Through  COSME  LGF,  EIF  offers  guarantees  and 
counter-guarantees,  to  selected  financial  intermediaries 
(e.g.  guarantee  institutions,  banks,  leasing  companies)  to 
help  them  to  provide  loans  and  leases  to  SMEs  which 
they would otherwise not support. By sharing the risk, the 
COSME guarantees allow the financial intermediaries to 
widen  the  range  of  SMEs  and  the  type  of  transactions 
that they can finance. 

Via  the  LGF,  the  EIF  also  offers  guarantees  for  the 
securitisation of SME debt finance portfolios with the aim 
of enabling financial intermediaries to generate new SME 
debt finance portfolios.

LGF is a successor to the SME Guarantee Facility (SMEG), 
successfully  implemented  under  the  Competitiveness  and 
Innovation Framework Programme (CIP) in the 2007–2013 
programming period.

What kind of financial institutions are 
eligible to become intermediaries 
under COSME LGF?

Financial  or  credit  institutions  or  loan  (debt)  funds  duly 
authorised to carry out lending or leasing activities (or 
in the case of the counter-guarantee: guarantee schemes, 
guarantee institutions or other credit or financial institutions 
duly authorised to issue guarantees).

Loan Guarantee Facility

How are financial intermediaries 
selected?

EIF  selects  intermediaries  after  carrying  out  a  detailed 
due  diligence  based  on  established  selection  criteria 
including  financial  standing,  financing  capacity,  operational 
impact  (e.g.  volumes  and 
capabilities,  and  expected 
geographical reach). 

What are the benefits of becoming 
an intermediary?

Depending  on  the  nature  and  strategy  of  each  institution, 
there  are  various  benefits  of  becoming  a  COSME 
intermediary  including  an  increase  in  loan  volumes  and 
the  possibility  to  gain  new  customers.  COSME  gives 
the  financial  intermediary  a  great  degree  of  autonomy, 
allowing  the  intermediary  to  have  full  delegation  on  the 
origination, credit decisions, servicing, etc.

How to apply for COSME LGF

Applicants  are  encouraged  to  visit  the  EIF  website,  read 
the  Call  for  Expression  of  Interest  and  download  the 
application  document  at  the  following  address:  http://
www.eif.org/what_we_do/guarantees/single_eu_debt_
instrument/cosme-loan-facility-growth/index.htm. 

Applications can be made at any time but must be made 
at  the  latest  before  30th  September  2020.  EIF  will 
select  intermediaries  on  a  continuous  basis  following  a 
due diligence process.

Equity Facility for Growth

How does the COSME EFG work?

Through COSME EFG, EIF invests in selected venture capital 
and private equity funds – acting as financial intermediaries 
–  that  provide  funding  to  SMEs  predominantly  in  their 
expansion  and  growth  stages.  Up  to  EUR  30m  may  be 
invested in a selected financial intermediary, limited to 25% 
of total commitments at any closing. EIF typically participates 
in the first closing of a selected fund. 

Fund managers are required to operate independently and 
on a commercial basis, committing to invest in SMEs with the 
greatest growth potential. 

The  Equity  Facility  for  Growth  (EFG)  is  a  successor  to 
the  High  Growth  and  Innovative  SME  Facility  (“GIF2”), 
under  the  Competitiveness  and  Innovation  Framework 
Programme (CIP) implemented in 2007–2013.

Which financial institutions can 
become intermediaries under  
COSME EFG?

To  become  a  financial  intermediary,  fund  managers  must 
fulfil certain conditions, a number of which are listed below: 

 ■

 ■

 Be based in a Participating Country; 

 Provide long-term equity and/or quasi-equity financing; 

Equity Facility for Growth

 ■

 Commit  to  invest  at  least  50%  of  invested  amounts 
into  SMEs  at  the  growth  and  expansion-stage, 
according  to  applicable  legislation,  established  and 
operating  in  one  or  more  of  the  EU  Member  States 
and COSME Participating Countries;

 ■

 Carry  out  activities  which  should  not  breach  ethical 
principles or contravene to EIF restricted sectors. 

Further requirements can be found in the Call for Expression 
of Interest. 

How to apply for COSME EFG

Applicants are encouraged to visit the EIF website where the 
Call for Expression of Interest is published and download 
the  application  document  at  the  following  address:  
http://www.eif.org/what_we_do/equity/single_eu_
equity_instrument/cosme_efg/index.htm 

An application can be made at any time but must be made 
at  the  latest  before  30th  September  2020  and  sent  to  
intermediaries 
cosme.efg@eif.org.  The  EIF  will  select 
following a commercial and legal due diligence process. 

Interested  financial  intermediaries  can  find  information  on 
how  to  work  with  the  European  Investment  Fund  on  its 
website at:

www.eif.org

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European Investment Fund

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37B, avenue J. F. Kennedy
L-2968 Luxembourg
3   (+352) 24 851
www.eif.org

Information for businesses – How to access EU financing 

Businesses can contact selected national financial  
institutions in their country to get access to  
finance supported by the EU: 

www.access2finance.eu

ISBN 978-92-79-44069-4 
doi:10.2769/51566